Trump victory could spell defeat for EU-U.S. trade deal

Reuters

By Philip Blenkinsop

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By Philip Blenkinsop

BRUSSELS (Reuters) - A protectionist U.S. president and increased European suspicion of a Trump-led America undermine the prospects of a planned transatlantic free trade agreement between the European Union and the United States.

Trump has argued that international trade deals hurt U.S. workers and the country's competitiveness, but it is not clear to what extent Trump the president will resemble Trump the campaigner.

"If the world's biggest economy follows a protectionist course, its effects will be felt around the world. We can only hope that his words are not followed by corresponding deeds," said Thilo Brodtmann, head of Germany's VDMA engineering association.

EU and U.S. officials have for more than three years been negotiating the Transatlantic Trade and Investment Partnership (TTIP), with Brussels and Washington recognizing it will not now be completed under Barack Obama's term as earlier envisaged.

"TTIP is history," Bernd Lange, chair of the European Parliament's Committee on International Trade, told online magazine vorwaerts.de when asked about the impact of Trump's win on the negotiations.

Germany, where exporters have done well from globalization and free trade, was more cautious. Asked at a news conference if TTIP was dead, Chancellor Angela Merkel's spokesman Steffen Seibert said: "No."

EU trade chief Cecilia Malmstrom said it was too early to assess the impact of Trump's victory, but a break was inevitable whoever had won.

"How long will that break be? Impossible to say ... There's a lot of uncertainty," she said.

Anthony Gardner, U.S. ambassador to the EU, told Reuters TTIP remained important for economic and strategic reasons, recognizing that the challenge was to convince more people that free trade is an opportunity, not a risk.

Malmstrom has previously said both sides should make as much progress as possible so that the work can be quickly picked up under the next president.

However, it seems unlikely that trade will be high on Trump's list of priorities or that TTIP will be top of his trade agenda.

Trump has instead talked about getting tough with China, withdrawing from the unfinalized 12-nation Trans-Pacific Partnership (TPP) and renegotiating or scrapping the North American Free Trade Agreement.

European Commission Vice President Jyrki Katainen noted that Trump had at least not singled out TTIP for criticism.

Hosuk-Lee Makiyama, director of trade think-tank ECIPE, said U.S. presidents typically took some time to forge trade policy and in the case of Obama and George W. Bush only really pushed trade policy deep into their second terms.

"TTIP is probably one of the last agenda items and I don't think we will see a trade policy until year two or year three," he said.

Trump will likely appoint a trade representative in March or April. His choice could be key, with possible appointees ranging from the protectionist Dan DiMicco, former CEO of steelmaker Nucor Corp <NUE.N>, to libertarian PayPal <PYPL.O> founder Peter Thiel.

A further problem TTIP has faced is opposition from trade unions and environmental and other protest groups, particularly in Europe, who say TTIP undermines democracy by giving multinationals the power to dictate public policy.

Critics would have an added argument in their fight against TTIP, able to paint the deal as one with a bogeyman president.

"Opposition to TTIP is strong, particularly in the light of the results of the election last night," Jeffrey Franks, director of the IMF's Europe office, told a trade conference.

(Additional reporting by Alastair Macdonald in Brussels, Georgina Prodhan in Frankfurt and Michael Nienaber in Berlin; editing by Giles Elgood)